Lucas Total Contract Solutions (Services) Pty Ltd
[2015] FWC 1947
•20 MARCH 2015
| [2015] FWC 1947 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Lucas Total Contract Solutions (Services) Pty Ltd
(AG2014/10916)
DEPUTY PRESIDENT BARTEL | ADELAIDE, 20 MARCH 2015 |
Application for approval of the Lucas TCS Enterprise Agreement 2014.
[1] An application for approval of an enterprise agreement known as the Lucas TCS Enterprise Agreement 2014 (the Agreement) has been made by Lucas Total Contract Solutions (Services) Pty Ltd (the employer). The application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act) and is an application for a single-enterprise agreement.
[2] The Construction, Forestry Mining and Energy Union (the CFMEU), being a bargaining representative for the Agreement, has filed a Form F18 Statutory Declaration. The CFMEU opposes the approval of the Agreement.
[3] The employer provides contract services to the mining and civil construction industries, including the provision of plant and equipment and management and operational personnel. The employer’s operations covered by the Agreement are currently limited to South Australia, but it is intended that the Agreement would operate in all States and Territories as new projects are acquired.
[4] Employees covered by the Agreement are covered by the following modern awards:
Mining Industry Award 2010 (MA000011)
Building and Construction General On-site Award 2010 (MA000020)
Road Transport (Long Distance Operations) Award 2010 (MA000039)
Quarrying Award 2010 (MA000037)
Manufacturing and Associated Industries and Occupations Award 2010 (MA000010)
[5] It is convenient to deal with the approval application by first considering the ‘procedural’ issues raised by the CFMEU in opposition to the application for approval.
Whether the Agreement was genuinely agreed by the employees
[6] Ms Dooley for the CFMEU, was critical of the employer’s failure to provide information to employees comparing the Agreement to the relevant modern awards. The material distributed by the employer to its employees compared the Agreement to the existing agreements that apply, being two collective agreement-based transitional instruments (the 2009 agreements) 1 made pursuant to the Workplace Relations Act 1996. The CFMEU suggested that the Fair Work Commission (the Commission) could not be satisfied that the employees had genuinely agreed to the Agreement being made having regard to the provisions of s.180(5) and s.188 of the Act, which provide as follows:
- “180 Employees must be given a copy of a proposed enterprise agreement etc.
...
Terms of the agreement must be explained to employees etc.
(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:
(a) employees from culturally and linguistically diverse backgrounds;
(b) young employees;
(c) employees who did not have a bargaining representative for the agreement.”
“188 When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”
[8] I am not persuaded by the CFMEU argument. The intent of ss.180(5) and 180(6) of the Act is to ensure that employees understand the effect of the agreement on their existing terms and conditions of employment so that they can make an informed decision on whether to support an enterprise agreement. An explanation of the effect of the Agreement by comparison to the relevant modern award does not inform employees of the change in their terms and conditions should they support the Agreement nor of the terms and conditions that would apply if they voted against it.
[9] A comparison of the Agreement against the relevant modern award is nonetheless an important consideration and is taken into account in considering whether the Agreement meets the better off overall test (BOOT) under s.186(2)(d) and s.193 of the Act.
[10] Was the group of employees fairly chosen?
[11] A further argument advanced by the CFMEU was that the group of employees covered by the Agreement was not “fairly chosen” within the meaning of s.186(3) of the Act.
“186 When the FWC must approve an enterprise agreement—general requirements
(1) ...
Requirement that the group of employees covered by the agreement is fairly chosen
(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
...
(6) ...”
[12] The CFMEU highlighted that the employer currently engages employees only in South Australia but the Agreement would apply to future work obtained by the employer in any State or Territory. It was argued that the application of the Agreement to future interstate work would undermine collective bargaining. In support of this position, the CFMEU relied upon the decision of a Full Bench of Fair Work Australia in CFMEU v John Holland Pty Ltd. 2 This decision overturned the decision at first instance to approve the Western Region Agreement Western Australia 2012-2016 (the Western Region EA).
[13] The Full Bench decision was the subject of an appeal by John Holland to the Federal Court of Australia, where the appeal was upheld. 3 The CFMEU then appealed this decision to a Full Court of the Federal Court of Australia, which dismissed the appeal.4
[14] Ms McCarthy advised that the employer has undertaken work in New South Wales and Queensland in the last 12 months which was covered by the 2009 agreements; that approximately 10% of current employees reside outside South Australia; and that the employees who voted on the Agreement reflect a fair spread of the classifications covered by the Agreement. It was submitted that these factors distinguish the employees covered by the Agreement from the circumstances of the employees covered by the Western Region EA.
[15] For present purposes it is sufficient to note that arguments similar to that advanced by the CFMEU here, were rejected by the Federal Court.
[16] The Full Federal Court accepted that, in determining whether the group of employees was fairly chosen under s.186(3) of the Act, the potential coverage of the enterprise agreement is to be considered, not just the actual employees who are engaged at the time the agreement is made. 5
[17] The argument that future employees on future sites would be denied the opportunity to collectively bargain was advanced by the CFMEU in the John Holland matter in the context of the following provision of the scope clause in the Western Region EA:
“1.2 Any project or site specific agreement entered into by the Company or by any Joint Venture or similar business arrangement of which the Company is part, will cover and apply to the Company and any employees at that particular project or site to the exclusion of this Agreement.”
[18] Suffice to say no equivalent provision exists in the Agreement. The Full Federal Court decision noted that enterprise agreements more generally will cover employees who were not engaged at the time it was made and who will not have the opportunity to bargain collectively. The Full Federal Court held that the reference in the Act to employees being “fairly chosen” generally referred to a choice made by the employer and the future scope of operation of an agreement needs to be examined to ensure that there is no element of manipulation or exploitation in the choice of actual versus potential workforce. 6 The CFMEU did not argue that the employer’s choice of the group of employees to be covered by the Agreement was motivated in this way.
[19] In the present case I am satisfied that the group of employees covered by the Agreement is operationally distinct and has been fairly chosen.
BOOT
[20] The assessment of the BOOT in this matter is a particularly complex exercise. There are five modern awards to be considered and employees may move between awards from project to project. The remuneration provisions of the Agreement comprise a high base rate coupled with reduced rates of shift penalties, casual loading, overtime rates and the absorption of some allowances. The majority of employees work in remote locations under several different roster patterns, while other employees are based in the metropolitan area.
Building and Construction General On-site Award 2010 (the On-site Award)
[21] A significant amount of material was provided by the parties in relation to the assessment of the BOOT in respect to the On-site Award. Part of the CFMEU’s argument that the Agreement did not pass the BOOT was based on the translation of classifications initially provided by the employer. An amended translation document was provided at the hearing 7 and this removed some of the CFMEU objections. In addition, the employer offered a range of undertakings in relation to other CFMEU objections, albeit while not conceding that they were required in all instances.
[22] The assessment of whether the Agreement passes the BOOT depends on the classification, roster pattern, employment status and location of the employee. I am satisfied that the majority of employees will be better off overall under the Agreement however there is a possibility that some casual employees working a particular configuration of hours, at a particular classification level, would be worse off. Based on the employer’s submissions, it appears unlikely that these configurations will arise in practice but nonetheless the potential for employees to be worse off under the Agreement is required to be taken into account.
[23] As noted, the employer has indicated its willingness to provide a series of undertakings to overcome any concerns about the BOOT assessment. Having regard to the terms of s.190(3) of the Act concerning undertakings which result in substantial changes to the agreement, it is in my view preferable for the employer to undertake to conduct a reconciliation of earnings under the Agreement and the Award. Any negative differential could then be rectified by payment of an amount such that that the relevant employees are better off overall. The reconciliation would be conducted annually and on the termination of employment, the latter being able to factor in the more favourable redundancy provisions of the On-site award, if relevant.
Other awards
[24] I have examined the material provided by the employer comparing the terms of the Agreement with each of the four remaining modern awards. There are some areas of concern in relation to the BOOT which the employer has offered to address via the provision of undertakings pursuant to s.190 of the Act.
[25] I consider that the provision of undertakings in respect to the following matters will enable the requirement in s.186(2)(d) of the Act to be satisfied:
● In calculating overtime each day will stand alone and overtime will be payable on Monday to Friday for hours in excess of the number of ordinary daily hours prescribed by the relevant modern award
● A four hour minimum engagement will apply for casual employees;
● Clause 42.5 of the Agreement will not be applied; 8 and
● Employees will be entitled to a period of 4 weeks annual leave (or 5 weeks for continuous shift workers), which can be taken in one or more periods as agreed between the employer and employee. An employee will receive payment for annual leave equivalent to 152 hours (or 190 hours for continuous shift workers) for the period of annual leave.
Flexibility Term
[26] I am not satisfied that the flexibility term in clause 7 of the Agreement meets the requirement of s.203(2)(a) of the Act. The Act requires that the flexibility term must set out the terms of the enterprise agreement the effect of which may be varied by an individual flexibility arrangement. Clause 7 of the Agreement enables an employer and employee to agree to an individual flexibility arrangement in respect to “a clause of this Agreement …” In my view this does not have the level of specificity required by the Act. Notwithstanding that an individual flexibility arrangement under a flexibility term can only be made by agreement, the current wording in clause 7 of the Agreement has the effect of potentially opening up the entire contents of the agreement to individual negotiation, including the scope clause and mandatory terms. Accordingly I determine that, in accordance with s.202(4) of the Act, the model flexibility term will be taken to be term of the Agreement.
[27] The employer is requested to advise the Commission and the CFMEU of its position in respect to the undertakings referred to in this decision and to provide a copy of the undertakings it is prepared to make within 7 days.
DEPUTY PRESIDENT
Appearances:
Ms E McCarthy for the applicant
Ms L Dooley for the Construction, Forestry, Mining and Energy Union
Hearing details:
2015:
Adelaide
5 February
Final written submissions:
4 March - Applicant
27 February - Construction, Forestry, Mining and Energy Union
1 The Lucas Personnel Services Operations Employees Employee Collective Agreement 2009 and the Lucas Personnel Services Maintenance Employees Employee Collective Agreement 2009
2 [2012] FWAFB 7866
3 John Holland Pty Ltd v CFMEU and Fair Work Commission, [2014] FCA 286
4 CFMEU v John Holland Pty Ltd and Fair Work Commission, [2015] FCAFC 16
5 Ibid, at paragraphs [36] - [40], [44] per Buchanan J
6 Ibid, at [32]-[34] per Buchanan J
7 Ex L1
8 This clause prohibits payment of a public holiday if the employee is absent on the day before or the day after the public holiday
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